Airbnb Takes Their Service to the Next Level: Building and Branding Their Own Apartments

Airbnb has been subject to increasing regulations from municipalities across the country, with various requirements being imposed. For example, many of these cities are necessitating that the owners of the units that are being listed obtain a rental license, limiting how many properties can be listed by one owner, requiring that the listing is the owner’s permanent residence, or subjecting them to hefty fines in areas that the rentals are not allowed.

Recently, Airbnb has announced a partnership with Newgard Development Group, a Florida real estate developer, to build an apartment complex in Kissimmee, Florida. This complex will be jointly branded “Niido powered by Airbnb”. The result will be a space that is designed for part term use as a rental property through Airbnb. The tenants can sign a lease with the landlord that allows them as tenants to rent out the space to others for up to 180 days per year. The apartment is designed to help facilitate this through ease of access for renters – such as keyless doors – and an app that will allow the tenant to manage the reservations and order cleaning services.

One of the main issues for many neighbors and landlords of apartment buildings subjected to frequent use by Airbnb travelers is the frustration with the noise and other results of so many people coming and going.

This has been part of the push for increased regulations. This new apartment design ensures uniform expectations across the board, with everyone involved aware of what the property they purchased or are renting will be used for.

With regulations on the rise across the country, you have to wonder how these complexes will fare if there is a crackdown within the area they are located? For example, there is a proposed law in Los Angeles that seeks to limit the number of days a property can be rented out to 180. These are the same limits that the new Airbnb complex would impose, however, in areas that decide to take a more narrow approach and limit the number to 120 or even 90 as many people would like to see, how would that affect the business plan of these new apartments? Taking that concern even further, what will happen in areas that impose restrictions such as the requirement that the rental be the permanent residence (which these Airbnb apartments could be for a frequent traveler but unlikely to be in all cases) or banning them altogether?

Perhaps the way around this, playing off Jaja Jackson’s comment (Airbnb’s director of global multifamily partnerships) about the “ab[ility] to put Niido locations in cities and locations that aren’t typically associated with tourism,” is to simply not build in areas that will likely see the strictest regulations. However, if the apartments are built in an area that does not see high tourism rates, then what is the incentive for the tenants to lease one of these apartments? Without high demand, will the profits meet expectations?

This is an interesting idea by Airbnb, and one with potential. It could be a way around the problems that they seem to keep running into, but I will be staying tuned to see how these developments could be affected by new and increased regulations.